By Vijay Kannan, Director-Digital, PwC India
Digital technologies are impacting industries and businesses alike. Leadership’s desire to capitalize on digital technology is so strong that it’s disrupting the enterprise operating model, as evidenced by shifting spending patterns, new digital roles, and undefined working relationships.
Since 2007, PwC’s Digital IQ survey research has asked one simple question: What actions can leaders take to confirm their digital investments deliver and sustain value? To get to the answer, PwC studies the practices and performance of global companies, drawn from the experience of nearly 2,000 business and technology executives. This year, 10 critical attributes have been identified that correlate with stronger financial performance and this is what comprises the digital IQ score. The survey found that companies with high digital IQ scores (those in the top quartile) are twice as likely to achieve rapid revenue and profit growth compared with the laggards in our study. Let’s summarize the facts and findings on the Digital IQ of Indian enterprises vis-à-vis their global counterparts.
Lack of a common definition – What is Digital?
According to the survey, in India, more than half (55%) of the companies surveyed viewed digital as technology innovation-related activities versus 53% globally. A large share of global companies (41%) said that digital means investments being made to integrate technology into every part of their business, only 29% of the Indian counterparts agreed with that statement.
And nearly half (48%) of the respondents in India said that digital is synonymous with IT (globally, 37%), while 39% believed that digital refers to customer-facing technology activities.
Leveraging digital investments for better customer experience & revenue growth
In India, 43% of the respondents pointed to creating better customer experiences as the most important consideration for digital investments, and 49% see revenue growth as a priority. To meet these goals, companies in India are spending somewhat aggressively, with 34% allocating more than 15% of revenue to digital investments (globally, 31%).
New and evolving roles – Chief Digital Officer
Where enterprise technology used to be the sole domain of the Chief Information Officer (CIO), there’s a shift happening in many organisations, with the traditional CIO role fragmenting across new and existing leaders. Some companies are appointing Chief Digital Officers (CDOs) to lead digital transformation efforts. (41%) of the respondents from Indian companies suggested that in three years’ time, the CIO may be tasked with only internal IT efforts with limited influence over digital investments, and only 12% suggested the CIO will be leading enterprise digital investments and efforts, including innovation and market-facing initiatives.
Digital IQ Attributes – India Vs Global Companies CEO Champion
The CEO is the natural leader as the focus on technology has shifted from operational efficiency to growth, and the stakeholders and conversations have changed. CEOs have ambitious expectations for digital, prioritizing disruption much more highly than the rest of the executive team. Nearly three quarters (71%) of business leaders in India point to their respective CEOs as champions for digital, as opposed to 73% globally.
Digital Leaders Set Strategy
CEOs may set the tone and vision for digital, but those responsible for operationalizing digital, often the CIO or CDO, are instrumental in setting high-level business strategy. For some organisations, one effective way to foster co-development of strategy is through new organisational structures. A global healthcare company, for example, created a digital council that brings together the company’s dozen CIOs and CMOs. 67% of companies in India say that the executives responsible for digital are involved in setting high-level business strategy (globally, 77%).
Executive Team Engaged
Beyond the CDO and CIO, the rest of the C-suite must also weigh in on—then buy-in to—the strategy. Being on the proverbial same-page means there’s greater likelihood to maximise investments, enabling the organisation to identify areas of overlap and bring to light any resource gaps that could derail efforts. Nearly 9 out of 10 (88%) of the respondents in India say their digital strategy is agreed upon and shared with its executive team, with the global number at 80%.
Strategy-sharing Across the Organization
Indian companies seem to be doing a much better job on organisational alignment on Digital as business-aligned digital strategy is agreed upon and shared enterprise-wide at 80% of the companies in India, compared with only 69% globally.
Outside-in approach
Top-performing companies take an outside-in approach to innovation, leveraging the considerable knowledge base of other innovators, such as vendors or customers, to uncover and apply new ideas for using technology. A small percentage of companies looking to disrupt their own or other industries—take an even more rigorous outside-in approach with a broad view of innovation. 65% of companies in India actively engage with external sources to gather new ideas for applying emerging technologies, in line with 64% globally.
Driven by Competitive Advantage
Actively engaging and learning from many outside sources creates an opportunity for market differentiation. Some of the most strategically important technologies companies are investing in are cybersecurity, data mining and analysis, data visualisation, and digital delivery. More than three-quarters (77%) of the respondents in India make enterprise investments primarily for competitive advantage, inline globally at 76%.
Effective Use of Business Data
Getting value out of the data you capture often means using it to guide strategic decisions like how to grow the business or whether to collaborate with competitors. Value-added data from third-party sources (71% versus 78% globally) tops the list followed by mobile customer interaction data (65%) and location-aware data (64%), as the key sources of data being harnessed by Indian companies.
Proactive Cyber Security
Keeping pace with security and privacy issues is another ongoing challenge, and one that all companies contend with in their ecosystems. One way leading companies do this is by routinely including risk managers and security leaders in conversations about new product and service development, especially those taking advantage of emerging technologies like the Internet of Things. More than three-quarters (76%) of companies in India say they proactively evaluate and plan for security and privacy risks in digital enterprise projects (globally, also 76%).
Digital Roadmap
More than half (58%) of the companies in India say they have a single, multi-year digital enterprise roadmap that includes business capabilities and processes as well as digital and IT components (globally, 53%). One of the reasons for the low global number is due to lack of the right skillsets. Just 55% of global executives said their organisation had all the technology skills needed to deliver on their enterprise vision.
Consistent Measurement
Business leaders demand to see the value they’re achieving from digital investments. Demonstrating this requires a combination of traditional metrics (like ROI) to track against growth goals, as well as newer ones for measuring more disruptive investments. 70% of executives in India say they consistently measure outcomes from digital investments, with a slight edge over the global number of 72%.
Businesses have embraced digital technologies and expect investments to drive growth and create competitive advantage. While it is pertinent that digital technologies will drive innovation, even the best of the best technologies cannot deliver success without a structured approach and a well-defined strategy. Enterprises will have to develop a comprehensive strategy around the manner in which they wish to organize their traditional business model to become a true digital business and identify ways to achieve the best possible results from it. Most importantly, enterprises need to integrate digital into the fabric of their corporate culture.